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The CSR paradox: how communicating about good can turn out bad

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The CSR paradox: how communicating about good can turn out bad

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THE CSR PARADOX:
HOW COMMUNICATING ABOUT GOOD CAN TURN OUT BAD

by

Vanessa Valdivia

A Thesis Presented to the
FACULTY OF THE USC GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
MASTER OF ARTS
(STRATEGIC PUBLIC RELATIONS)

May 2012

Copyright 2012 Vanessa Valdivia
ii
Dedication
For my family and friends, who offered me unconditional support throughout the course
of this thesis. For my parents, whose hard work has allowed me to have the many
opportunities in my life. For my sister, Arlen, who has been my best friend along the
way. My accomplishments are yours.
iii
Acknowledgments
From the formative stages of this thesis, to the final draft, I owe an immense debt of
gratitude to my thesis committee chair and mentor, Gabriel Kahn. His dedication to this
project and patient encouragement helped bring my ideas to life. I am so grateful for his
guidance not just through this process, but also throughout my graduate career at USC. I
wish to thank my committee members Burghardt Tenderich and Laura Jackson for their
feedback and direction. I would also like to thank my interview sources for their time and
invaluable insights.
To each of the above, I extend my deepest appreciation.

iv
Table of Contents
Dedication ii
Acknowledgments iii
List of Tables vi
List of Figures vii
Abstract viii
Introduction 1
CSR and Public Relations 5
Research Methodology 7
Chapter One: What is Corporate Social Responsibility? 8
Chapter Two: Literature Review 11
Chapter Three: Contextual Analysis of CSR 26
Chapter Four: Communication Challenges 32
Chapter Five: Motivation 38
Case Study: Apple and The Coca-Cola Company
Chapter Six: Definitions 43
Case Study: The Walt Disney Company and PepsiCo.
Chapter Seven: Audience 48
Case Study: Ford Motor Co. and Timberland
Chapter Eight: Reporting 53
Case Study: Bank of America and The Gap Inc.
Chapter Nine: Regulations on the Horizon 59
Conclusion 63

v
Discussion 68
Bibliography 69

vi
List of Tables

Table 1: Interviews Conducted 33
Table 2: Framework for Evaluating CSR Communications 37
vii
List of Figures

Figure 1: KPMG Global Reporting Trends 22
Figure 2: Timberland CSR Communication Portal 50
viii
Abstract
This thesis seeks to examine how corporate communications has responded and adapted
to changes in the corporate social responsibility (CSR) field. In order to do so, this thesis
chronicles how the CSR landscape has changed in response to many internal and external
pressures. The field of corporate social responsibility has evolved from its philanthropic
roots to a more central and regulated practice. That means communication efforts must
make a similar transformation in order to effectively communicate CSR work. Examining
the evolving field of corporate social responsibility lays the groundwork for
understanding how communications must adapt to new challenges. Key issues discussed
in this paper include the origins of CSR, current demands in the field and communication
challenges. The research demonstrates that CSR needs effective communicators who
understand both how the landscape is changing and what stakeholders are looking for in
order to create a more engaging, honest and effective dialogue.

1
Introduction
In the last decade corporate social responsibility (CSR) has evolved tremendously
in various ways (Kemper & Martin, 2010). Research, as well as corporate examples,
illustrate that CSR is moving from the periphery to the center. This has shifted how
companies have incorporated CSR, from integrating CSR into their operational strategy
to changing how a company structures and organizes itself. This thesis seeks to examine
how corporate communications has responded and adapted to the multiple changes in the
CSR field.
In order to follow this line of inquiry, it first requires understanding a number of
the fundamental changes that have taken place in CSR. The changes in corporate
social responsibility have created a sense of disconnect with the communications
practice. As Kirk Stewart of APCO Worldwide stated in an interview for this project,
“CSR has evolved, but the communication strategies haven’t quite yet caught up”
(personal communication, January 25, 2012).
One of these changes is the expanded definition of CSR. This expansion itself
requires different strategies in communicating with audiences. The definition can range
from corporate governance to sustainability and requires knowing what CSR means in
these different contexts. One of the important things about the different definitions is that
they appeal to different stakeholders, which then requires distinctive communication
strategies. The Walt Disney Company, for example, incorporates their CSR work as
citizenship in order to encompass the company’s broad reach. This notion of citizenship
seemingly appeals to their corporate governance and public image.
2
As CSR initiatives have become common, the concept of CSR has become more
nuanced. One of the consequences of different interpretations of CSR is that it can leave
out key audiences. This can be illustrated in how companies decide to incorporate and
communicate CSR information. Some companies, such as The Coca-Cola Company and
Ford Motor Co., make an active effort to integrate their CSR work into financial reports
and also display their CSR work in places accessible to investors (i.e. the company
investor relations page). This indicates that these companies need to communicate their
CSR work to their financial audience in a very particular way. However, this focus on
communicating to their financial stakeholders may cause them to unintentionally leave
out other important audiences. Public relations would be best served to understand these
different relationships and how to leverage them in order to communicate a company’s
CSR work throughout various audience levels.
In many cases, the push for CSR is coming from the top down. For example, 44%
of the survey respondents in the Boston Center for Corporate Citizenship’s 2010 “Profile
of the Practice” reported that there is a vice president or director-level position for
leading corporate citizenship in their companies. In 2008, only 27% indicated that their
company had a full-time executive to manage corporate citizenship (Boston Center for
Corporate Citizenship, 2010). In 2011, many companies, such as Coca-Cola and UPS,
appointed their first chief sustainability officers. This advent of the chief sustainability
officers signals that companies understand the need for a senior level position to oversee
the CSR work and that the work is not just expanding but becoming a pivotal part of the
company’s operations.
3
In the past few years, alongside establishing CSR departments and initiatives,
companies have begun to detail their activities in their annual reports. A KPMG survey
reports that as of 2011, 95% of the 250 largest global companies now report on their
corporate responsibility activities (KPMG , 2011). Ostensibly, companies see a value in
disclosing more about their CSR activities to the public. But at the same time, the
public’s view of business has fallen to record lows (Edelman, 2011). The low levels of
public trust in business means that communication efforts are all the more crucial.
CSR continues to evolve and has become a very complicated field. This evolution
of CSR calls for a similar evolution of CSR communication strategy. CSR
communications requires strategy because as CSR has developed, it now has many
different components to it. Companies have different CSR concerns, and thus have
different CSR strategies that should be communicated accordingly. For example,
Timberland incorporates their CSR strategy into the purchasing experience of their
product. Their CSR strategy drives right down to the retail level, meaning CSR
communication should involve product marketing. Apple’s CSR strategy, on the other
hand, focuses on supply chain issues, responding to a different stakeholder and thus
Apple approaches their CSR communication much differently than Timberland. As a
financial service company Bank of America, faces stringent regulations and therefore
their CSR communications has to take a different approach than Timberland and Apple.
This thesis seeks to understand what communication challenges need to be
addressed in order to best apply communication strategy in CSR. The expectations of
what should be communicated, how to communicate and to whom and when, have
4
shifted. The author has untangled and separated the different issues in order to get more
clarity of what is meant by CSR and CSR communications. This led the author to create a
taxonomy of the different issue areas, which has guided the organization of issues
throughout the thesis. This research will look at changes in CSR in the last few years, key
challenges in communicating CSR efforts, and several case studies of different company
CSR initiatives. This research examines different points of tension that can arise between
CSR strategies and communication efforts – both the successes and failures.
5
CSR and Public Relations
Corporate social responsibility is one of the most prominent themes in the field of
public relations. In 2011 Nike revamped its efforts with its “Better World” campaign;
companies such as Apple and Bank of America increased reporting efforts; and even
retail giant Wal-Mart launched a blog dedicated to its sustainability efforts. In 2008,
Harold Burson, Founding Chairman of Burson-Marsteller, stated: “When implemented
correctly, [corporate social responsibility] is an important part of the reputation building
process. It adds to the bottom line with greater sales and consumer satisfaction. It serves
as a positive differentiator from competitors. It’s a form of corporate behavior we in
public relations should embrace whole-heartedly.”
Public relations acts as a crucial bridge to stakeholders by building a narrative
around how a company’s CSR activities relates to its mission and serves its public. Public
relations has the potential to tie together the CSR function with various levels of
corporate operations, from marketing and public affairs, to investor relations and supply-
chain management. This type of public relations encompasses issues management,
corporate reputation, stakeholder relationships and CSR reporting – illustrating the
various functions PR has related to CSR efforts. This illustration is crucial, because it
demonstrates the value of the work that can be done by PR professionals and the room
they have to grow in this space.
However, as CSR efforts become more ingrained into business functionality, the
role of communication professionals has become a more contested topic. An interview
with David Quast, a strategic communications consultant, highlighted that CSR is not
6
frequently discussed by investors, nor frequently engaged in or discussed prominently in
many corporations, often because of the fear of self-promotion (personal communication,
February 1, 2012). This breeds questions of concern, including: Should there still be
direct ties between CSR and public relations, corporate communication, advertising, or
marketing? Or do these ties tarnish the intentions behind CSR? Links to any of these
functions might create a strong impression of self-interested promotion, thereby
obscuring the benefits to stakeholders (Coombs & Holladay, 2011).
PR firms now must craft a strategic approach toward handling CSR. Among the
top 10 PR firms working in the CSR field are Edelman, Burson-Marsteller, Manning
Selvage & Lee, Ogilvy PR, and Weber Shandwick, according to CR Magazine (2010).
These firms’ rankings demonstrate that public relations is part of the CSR discourse. As
CSR continues to shift toward creating shared value, PR professionals must understand
the dynamics and components behind it. Public relations needs to communicate CSR
strategy effectively in order to further build corporate accountability and transparency.
Critics warn that one of the biggest risks in a CSR program is that it can easily become
insulated, self-serving and self-affirming (Basu, 2008), often to the detriment of its
intended goals. This mirrors the critique of the role of public relations in CSR. When
CSR initiatives and the rationale behind them are not properly communicated, companies
may easily find themselves in this position. Public relations has the opportunity to create
an effective communication strategy that more accurately reflects CSR strategy.

7
Research Methodology
In order to evaluate the breadth and complexity of the topic, the research
undertaken for this thesis involved different levels of analysis. Primary research was
carried out through qualitative interviews with various thought leaders in the field,
including representatives from corporate CSR departments, PR practitioners, academic
resources and other related participants. This was carried out through both audio-recorded
and non-recorded interviews. All interviews discussed the topic of CSR, emphasizing the
challenges of CSR from each interviewee’s specific vantage point. This allowed for a
varied approach to the topic according to the conversant. Secondary analysis in the form
of content analysis of corporate websites, as well as financial and non-financial reports,
was executed in order to supplement the interviews in analyzing the case study
companies’ CSR communication efforts. Companies were chosen on a non-random basis.
They qualified if they were a public company listed within the Fortune 500 list. This was
the case because public companies are especially attuned to CSR concerns given the level
of scrutiny they receive in this space. Additional secondary research included various
academic journals, industry studies and mainstream media analysis of publications such
as The Wall Street Journal, The New York Times, Forbes, The Economist, CSRWire,
TriplePundit, etc.

8
Chapter One: What is Corporate Social Responsibility?
One of the major problems in corporate social responsibility is that it is beset by
the lack of a clear definition. The terminology behind CSR has become one of the main
catalysts for confusion in this field. This chapter provides an overview of definitions, as
well as the impact definitional construct has on the development of CSR.
There have been many attempts to establish a better understanding of CSR and to
develop a more robust definition. Perhaps best known is Archie Carroll’s (1999)
literature review of CSR definitions in academic publications. Others have also presented
reviews of available definitions, which have been useful in providing an overview of the
historical development of the concept. However, these reviews are limited in that they
merely present an account of available definitions, which is not sufficient to understand
how CSR is currently socially constructed. Understanding the social construction of CSR
allows for better insight into how CSR is interpreted by audiences outside of academia.
Before moving forward, it is necessary to outline some of the key terms that are
often used interchangeably to define CSR, or considered a form of CSR activities. As
business studies began to articulate the notion of CSR, sustainability became a term that
captured business concerns critical to the viability of a company.
Sustainability isn’t just about social responsibility. It’s about competitive advantage —
about aligning your business with your stakeholders’ financial, environmental and social
expectations, and achieving winning results along the way. (Fleishman-Hillard, 2011)
In this, the term sustainability encapsulates the sentiment that in order to compete
effectively, businesses must understand environmental and other operational constraints
that may hinder their competitiveness. This concept of sustainability is very closely tied
9
to triple bottom line:
The triple bottom line (TBL) consists of three Ps: profit, people and planet. It aims to
measure the financial, social and environmental performance of the corporation over a
period of time. Only a company that produces a TBL is taking account of the full cost
involved in doing business. (The Economist, 2009)
Both TBL and sustainability emphasize the financial benefit of integrating CSR into
business. They emphasize performance and competitive advantage through CSR.
Corporate citizenship tends to illustrate the role of business as one that has
responsibilities as a citizen of the community(ies) in which they operate. Scholars
typically point to how corporate citizenship can help politicize the corporation. The
citizenship concept also implies that the corporation has rights (Ihlen et al, 2011).
Corporate Citizenship can be defined as extending the relationship between business and
society to include an understanding of the social, environmental and political
responsibilities of business. (Visser et al, 2010)
Several authors prefer the term corporate responsibility, dropping the “social” to
avoid the connotation that it is limited to “social” concerns. This is also the term favored
by large corporations such as Chevron (2010) and ING Group (2010). Probably the best
argument for using the term corporate responsibility is that it directs attention to how the
responsibilities of business extend to the economic sphere and the environment. This
extension of responsibilities then allows businesses to address social concerns through
philanthropy-related efforts.
In the past few years, the concept of corporate social responsibility has also come
closer to the broader concept of sustainable development (Herrmann, 2004). It is for these
reasons that the notions of corporate social responsibility, corporate citizenship and
10
sustainable development are used jointly. Such a jumble of terms, though, arms critics
who can tear apart the whole concept by pointing to a few bad examples. These
definitions are also often biased toward specific interests and thus can complicate the
development and implementations of the concept. If competing definitions have
diverging biases, people will talk about CSR differently and this in turn can impede
productive dialogue on the topic (Dahlsrud, 2006).
Another challenge in discussing CSR is that it cannot be reduced to one simple
concept. CSR is a composite of activities drawn from different academic and professional
disciplines. CSR draws upon an array of issues concerning the environment, human
rights, workplace issues, business ethics, sustainability, community development and
corporate governance. The breadth of issues CSR encompasses highlights the importance
of defining the concept of CSR and articulating its parameters. For the purposes of this
paper, the terms corporate social responsibility or CSR will be used interchangeably
within the different terminology.
At a minimum, CSR focuses on the ways corporations manage economic, social
and/or environmental issues. CSR can thus be defined as an activity undertaken by a
corporation in attempt to negotiate its relationship to stakeholders and the public at large,
which might include the process of mapping and evaluating demands from stakeholders,
and the development and implementation of actions and policies to meet (or ignore) these
demands (Coombs & Holladay, 2011).

11
Chapter Two: Literature Review
The upsurge in corporate social responsibility (CSR) has prompted a wide array
of disciplines to try to understand what it all means. Business schools have dedicated
programs centered on “business ethics” and corporate responsibility; many public
relations firms have some area of practice in corporate social responsibility; and
marketers are tuning into consumer trends and utilizing effective cause-marketing efforts
to reach them. While there is an extensive body of literature on corporate social
responsibility, the literature on CSR communication is disproportionate in size, with
relatively little cross-disciplinary research on the topic. There still seems to be gaps in
how to approach CSR communication. The purpose of the literature review conducted for
this project is two-fold: it chronicles the origins of CSR and the most relevant research in
this field, while also exploring the potential holes that exist, given that the field is very
dynamic. The ideology surrounding CSR is concerned with the role companies play in
the broader social context. The development of this relationship in both academic
literature and industry-led studies will be presented in the literature review. The review
will also outline various theoretical frameworks in CSR and highlight recent research in
CSR communication.
Corporations and Society: An Ill-Fated Pair?
Corporate social responsibility is a field built upon understanding the relationship
between business and society. Profitable companies can make important contributions to
society. Companies create value and generate financial results within the framework of
the society in which they operate. But companies are not just operating in a single
12
marketplace. They are also operating within both local and global cultures, communities
and political systems.
During the last century, traditional capitalism focused on the effective utilization
of capital and resources (Manubens, 2009). Globalization expanded the terrain upon
which comparative advantages—including cheap labor—could be exploited. However,
this newfound connectivity of globalization brought to light the profound impact that
corporations could have in the societies where they operated. The human and labor rights
movement of the 1960s and ‘70s prompted greater pressure and scrutiny of large multi-
national corporations (Segerlund, 2010). By the late 1990s, consumer awareness of
workers’ rights violations in factories around the world had increased. This incited many
high-profile campaigns against labor abuses, which called attention to unfair labor
practices and sweatshops used by apparel and footwear companies like Nike. The
environmental movement brought to light the depletion of natural resources needed to
sustain business operations. This focus on environmental concerns created a wide array
of advocacy groups that targeted valuable brands, like Nestle, and helped propel the
“green” movement. Those examples illustrate how stakeholders could associate brands
with activities they perceived as irresponsible, significantly impacting the value of the
brand (Visser et al, 2010).
Some companies have realized that there might be penalties for not finding
business solutions to social problems, including loss of global competitiveness, lagging
technology, greater waste, more regulation and possible erosion of the market or supply
chain. Yet the relationship between business and society often continues to blur lines of
13
responsibility. In fact, a report in Foreign Policy Magazine spotlighted the phenomenon
of corporate power, comparing the financial strength of some of the world’s largest
companies to that of national economies around the world. For example, the report
highlighted how the sales revenues of Wal-Mart were higher than the GDPs of all but 25
countries (Rothkopf, 2012). The implication is that, now, more than ever, companies
must understand the delicate footing needed to proceed in the CSR field.
Early Research
While it is possible to trace the business community’s concern for society for
centuries; however, formal writing about the concept of CSR is largely a product of the
20
th
century, dating back to the 1950s. Often cited as the precursor to the modern concept
of CSR is economist Howard Bowen’s 1953 book, Social Responsibilities of the
Businessman. Bowen defined corporate social responsibilities in 1953 as "the obligations
of businessmen to pursue those policies, to make those decisions, or to follow those lines
of action which are desirable in terms of the objectives and values of our society" (p.6).
One of the most prominent writers in the 1960s to define CSR was Keith Davis. He set
forth his now-famous "Iron Law of Responsibility," which held that "social responsibility
arises from social power” (Davis, 1975, p. 20). He further took the position that if social
responsibility and power were to be relatively equal, "then the avoidance of social
responsibility leads to gradual erosion of social power" (p.20) on the part of businesses.
In the 1960s, interest in CSR became feverish as activists at all points of the
ideological and geographical compass called for higher standards of business and
government performance. Non-profits asked to share business profits, while academics
14
argued over the differences between the modern and post-modern organization. In one
way or another, all discussions of CSR recall the prominent claim of economist Milton
Friedman (1970) that “CSR is nonsense.” Friedman sparked decades of controversy by
arguing that the only responsibility of publicly held companies was to increase profits—
the efficiency paradigm of organizational excellence. His seminal piece in the New York
Times Magazine, “The Social Responsibility of Business is to Increase its Profits,” (1970)
has influenced the way different stakeholders view the discipline. He called what most
were praising as “responsibility” just “catchwords of the contemporary crop of re-
formers.”
Friedman wrote:
The discussions of the “social responsibilities of business” are notable for their analytical
looseness and lack of rigor. What does it mean to say that “business” has responsibilities?
Only people can have responsibilities. A corporation is an artificial person and in this
sense may have artificial responsibilities, but “business” as a whole cannot be said to
have responsibilities, even in this vague sense. The first step toward clarity in examining
the doctrine of the social responsibility of business is to ask precisely what it implies for
whom. (1970)
The landscape has indeed changed in the time since Friedman wrote this pivotal
piece. While some still hold onto Friedman’s philosophy, most have moved beyond this
and understand that corporate responsibility is not a “why” but “how.” What is important
about the Friedman argument is that it represents a tension still present, even if below the
surface. This tension is one that underscores how CSR efforts are perceived. Here
perception is critical from a communications standpoint. Many companies may be
hesitant to pursue a communications strategy that may seem self-serving or hypocritical.
15
Both Bowen and Friedman were economists trying to make sense of the role business
should play in society. It is interesting to note how ideology in CSR has grown from
these economists’ perspectives and how this concept continues to mirror the strong
business school presence in CSR development.
Since Bowen and Friedman, there has been a rich stream of work on various
aspects of CSR, using, next to CSR, a variety of labels and concepts such as business
ethics, sustainability and corporate citizenship. During the 1970s and 1980s, there was a
focus on articulating exactly what were the responsibilities of a corporation were. A
landmark contribution to the concept of CSR came from the Committee for Economic
Development (CED) in its 1971 publication Social Responsibilities of Business
Corporations. The CED noted that the social contract between business and society was
changing in substantial and important ways (Carroll, 1999). In the late 70s both the
Organization of Economic Cooperation and Development (OECD) and the United
Nations Center on Transnational Corporations (UNCTC) began developing codes of
conduct in an attempt to control different aspects of corporate globalization (Segerlund,
2010).
Peter Drucker, the prominent management guru, stepped onto the CSR stage in
1984 when he wrote in the California Management Review about the imperative to turn
social problems into economic opportunities (as cited in Carroll, 1999). Ice cream
manufacturer, Ben & Jerry’s, was the first company to publish a social report in 1989
(Chandler, 2010). It was the first major corporation to allow an independent social audit
of its business operations. Research organizations began to focus on this area in the
16
1980s. For instance, the well-known Boston College Center for Corporate Citizenship, a
membership-based research organization, was founded in 1985. In the 1990s when
controversies surrounded companies such as Shell, Nike and Monsanto, which signaled a
strategic evolution of the corporate agenda, several entities formed. Among them were:
The Fair Labor Association, The World Business Council on Sustainable Development,
Business for Social Responsibility, the ISO 14001 environmental management system,
Brazil’s Ethos Institute and the Dow Jones Sustainability Index.
Theoretical Framework
In the late 1970s Archie Carroll proposed a model that contains the following four
categories of corporate responsibility in decreasing order of importance:
Economic
Legal
Ethical
Discretional/philanthropic
The four classes of responsibility were seen to reflect the evolution of interaction
between business and society in the United States. According to Carroll, “the history of
business suggests an early emphasis on the economic and then legal aspects and a later
concern for the ethical and discretionary aspects” (1979, p. 500). Economic obligations
were therefore seen to be tempered by ethical responsibilities or social expectations and
norms. Obligations were not mutually exclusive and often were in tension with one
another. This continues to reflect some of the sentiment of where companies feel tension
with CSR activities today.
R. Edward Freeman established stakeholder theory, emphasizing a broad set of
social responsibilities for business, in 1984 through his groundbreaking book, Strategic
17
Management: A Stakeholder Approach, which influenced the field of Business and
Society. Freeman defined stakeholders as “any group or individual who is affected by or
can affect the achievement of an organization’s objectives” (p.46). This conceptualization
of stakeholders has played an influential role on current research and analysis on CSR.
Freeman’s stakeholder approach was also a pivotal point for public relations as it bridged
a fundamental role of the PR function with business’ CSR efforts. While Freeman framed
and distinguished stakeholders as elements of corporate strategic planning, he most
importantly demonstrated the urgency of stakeholders for the mission and purpose of the
company; in doing so, he also suggested the positive financial implications of better
relationships with stakeholders. In recent years, stakeholder theory has developed a focus
on the importance of engaging stakeholders in long-term value creation (Andriof et al.
2002). This is a process whose perspective focuses on developing a long-term mutual
relationship rather than simply focusing on immediate profit.
Current Research
Recent literature on the subject highlights the importance of strategy and
synchronization of business and CSR efforts. It also demonstrates the potential CSR
communication has to expand its reach. The research in the last five years signals the
institutionalization of CSR. Mark Kramer and Harvard Business School Professor
Michael Porter’s “shared value” approach has resonated within the business community.
Porter and Kramer’s (2011) article, “The Big Idea: Creating Shared Value,” in the
Harvard Business Review, proposes a revised CSR approach that redefines some of the
key notions about capitalism and businesses relationship in society. Their concept is
18
called corporate shared value (CSV). Porter and Kramer argue that CSR programs focus
mostly on reputation and have only a limited connection to the business, making CSR
programs hard to justify and maintain over the long run. In contrast, CSV is integral to a
company’s profitability and competitive position. While this may be true, the focus on
profitability and competitive positioning detracts from building trust and minimizing
stakeholder skepticism. This research mostly satisfies a paradigm of business thinking
needed by management and investors/shareholders. Porter and Kramer’s earlier article,
“Strategy and Society: The Link Between Competitive Advantage and Corporate Social
Responsibility” (2006), concluded that if corporations were to analyze their opportunities
for social responsibility using the same frameworks that guide their core business
choices, they would discover that CSR could be much more than a cost, a constraint, or a
charitable deed – it could be a potent source of innovation and competitive advantage.
Porter and Kramer’s work has really become a driving force for much of the discussion
around CSR today.
However, not all agree with the concept of shared value. A more neutral view of
CSR is expressed by David Vogel (2005) in The Market for Virtue: The Potential and
Limits of Corporate Social Responsibility, where he suggests that CSR is not a
precondition for business success but a dimension of corporate strategy. "Just as firms
that spend more on marketing are not necessarily more profitable than those that spend
less, there is no reason to expect more responsible firms to outperform less responsible
ones,” he writes (Vogel, 2005, p. 33). In other words, the risks associated with CSR are
not different from those associated with any other business strategy; sometimes
19
investments in CSR deliver returns and sometimes they do not. Vogel points to the
argument that CSR makes good business sense for some corporations, in some sectors,
under certain circumstances. He believes that the business case is overblown; it is only
after a product has passed the price and quality hurdles that CSR might be important
(Vogel, 2005). There is plenty of evidence to show how the markets do not necessarily
punish corporations that do not engage in CSR; “unethical” stocks are still strong (as
cited in Ihlen et al, 2011). Vogel’s outlook can help guide CSR communication as it
signals that CSR is not always guaranteed to produce goodwill in stakeholder
relationships or drive profits.
The beginning of the 2000s also a saw an increase in the mainstream discussion of
corporate responsibility. The Economist dedicated a series of reports investigating and
discussing the topic in the 2005. CSR is now a topic that regularly makes headlines–
however, it is not always favorably depicted in the best interests of the corporation. Given
CSR’s confluence across many issues, it may not be surprising that it is difficult for
companies to always control their CSR-related messages. A company can face difficulty
with CSR through media coverage that reports on anything from environmental to social
concerns. As a result, more companies are becoming more proactive in displaying their
CSR efforts. By 2008, 86% of companies on the Standard and Poor's 100 Index had
corporate sustainability websites, compared to 58% in 2005, according to the 2008 S&P
100 Sustainability Report Comparison from the Sustainable Investment Research Analyst
Network (SIRAN), a working group of the Social Investment Forum.
20
Many of the critiques that CSR faces are very much related to communication
issues. Critics point to discrepancies between what is said and what is done (Aras &
Crowther, 2009). This begs the question of whether communication is even needed for
CSR. Public relations, in particular, has been criticized for being a shallow discipline
intent on glossing up images of organizations. Some argue against placing the
responsibility for CSR activities in the public relations department of an organization
(Frankental, 2001). Ihlen, Bartlett and May (2011) aimed to assess the role of
communication in CSR in their book The Handbook of Communication and Corporate
Social Responsibility. Their goal was to create the definitive research collection for CSR
communication. They pulled together and expanded upon existing recommendations
from management as well as from communication disciplines such as public relations,
organizational communication, marketing and reputation management. They found that
when communication was actually mentioned in current literature, the communication
ideal that was implied was often ill-defined and vague. The authors pointed out that often,
calls are issued for corporations to engage in stakeholder dialogue and implement
transparency and accountability through the publication of nonfinancial reports.
However, they noted that the literature on the topic seldom mined the insights that could
be culled from the various communication disciplines. In Ihlen, Bartlett and May’s
commentary, they expand on the contributions in the handbook and focus in particular on
the conceptualization of the social aspect in CSR; namely, to whom are corporations
responsible and with whom should they communicate. One of their basic arguments is
that there is a need for a clearer understanding and a more rigorous approach to this
21
keyword. They propose that communication studies are well positioned to help further an
understanding of the role and significance of CSR discourse and its impacts.
In the most recent attempt to address the communication role in CSR, Coombs
and Holladay’s Managing Corporate Social Responsibility (2011) concentrates on
external and internal communication to a variety of stakeholders. It positions CSR as
consistent with other PR responsibilities by emphasizing a stakeholder approach to
support public relations’ involvement in the overall process. The book points to the shift
in marketing and other departments seeking to claim CSR communication as their own,
thus implying the need to accurately understand the impact communication has on CSR
efforts. Much of the research on communication is focused on psychology and marketing
– underlining the relationship to business ideals. This is where business analysis leaves an
opening for communication efforts. The research that does focus on communication
explores how to make efforts more visible (Econsultancy, 2012). But visibility is not
always the optimal choice for companies. Effective communications approaches can
move beyond marketing and psychology to provide a more meaningful engagement with
stakeholders.
Industry research has also explored the development of CSR communication.
KPMG’s CSR reporting research (2011) demonstrates trends in how many companies are
now taking up reporting standards. The output of reports has been increasing
exponentially alongside the expansion of reporting to encompass various issues that are
now categorized as CSR. KPMG’s analysis demonstrates the shift to a more diverse
report that includes much more than environmental data.
22
Figure 1: Global report output per year Types of reports: Global report out by type and year

(Source: KPMG 2011)
Several research pieces that were written after the 2008 financial crisis point to
the shift in the importance of trust and accountability. Allison Kemper and Roger
Martin’s article “After the Fall: The Global Financial Crisis as a Test of Corporate Social
Responsibility Theories” (2011) emphasizes the importance of this shift in reporting
trends. The article highlights that, in an effort to engage investors and the financial
community in non-financial performance, Bloomberg added environmental, social and
governance (ESG) data to its terminals. Similarly, the IIRC (International Integrated
Reporting Committee) is bridging the gap between purely financial and purely
sustainable reporting. Senior Vice President of the Social Responsibility Program for the
Phillips-Van Heusen Corporation, Marcela Manubens’ “CSR in an Economic Crisis”
focuses on the aftermath of the 2008 financial crisis as an opportunity for renewal, stating
that it serves as a catalyst for change for CSR. Boston College Center for Corporate
23
Citizenship’s “The State of Corporate Citizenship 2009: Weathering the Storm” found
that corporate citizenship was weathering the recession and was increasingly being
integrated into business strategy and operations. This was demonstrated in a survey of
business leaders the organization conducted. Among those polled, 54% said the tenets of
corporate social responsibility were seen as even more important because of the recession
(“The State of Corporate Citizenship”, 2009). This statistic emphasizes the shifting
interest in business and management perspectives on CSR. This also likely prompted
some companies in the financial services industry to create a storyline and message
around “responsibility.”
A more recent interest in identifying stakeholders in CSR has also begun to
surface in various research pieces. Leveraging Corporate Responsibility (2011) mirrors
much of the earlier theoretical framework on stakeholders. The authors (Bhattacharya,
Korschun & Sen) of Leveraging Corporate Responsibility argue that businesses should
focus on employees and customers as stakeholders, emphasizing that corporate
responsibility (CR) cannot exist effectively without stakeholder demand. The authors
argue that if stakeholders do not ultimately value CR, rewarding companies for their
efforts in this domain, the CR movement cannot be sustainable. An interview with one of
the authors, CB Bhattacharya, stated that there are fundamental gaps in knowledge of
how stakeholders respond to corporate responsibility. He went on to say that
communication efforts are still not able to reap real value; there is still a long way to go
(CB Bhattacharya, personal communication, January 25, 2012). This is critical for
understanding who to direct CSR communication efforts to, and approaches for doing so.
24
Summary
This literature review highlights the breadth of this topic and the many challenges
faced when communicating about CSR. It is important to have a snapshot of how this
field has evolved and what underlying tensions exist. This helps underscore the potential
impact that communication efforts can have within this space.
CSR gained momentum in the 1970s, and by the 1980s emerged as a popular
North American concept. In the 1990s, its initial objective was to protect the reputations
of corporations; philanthropy was used to foster goodwill. Since the mid-1990s, there has
been a shifting interest in CSR. The concept has expanded to include social compliance
and environmental stewardship, climate concerns, and philanthropy and governance,
thereby capturing emerging elements of the enterprise not part of a more traditional
model of capitalism. The first stages of CSR looked at it from the perspective of single
issues of concern for society. In the last decade, CSR has moved onto the agenda of
business studies in a more systematic fashion. As CSR becomes more systematic,
research from various academic interests, industries and organizations has become more
robust.
CSR is fluid and continues changing as societal values evolve. What this
compendium of research demonstrates is the disconnect between the way communication
professionals continue to view CSR and the way the field itself and other academics are
operating in the CSR space. Most communication research focuses on traditional issues
like reputation and marketing, without fully understanding or accommodating the
changes in CSR. While risk management and reputation are still important to CSR
25
communication, they do not necessarily capture the sentiment nor direction of where the
field is headed.
This literature review demonstrates that CSR is a vibrant field with an array of
subsets. It touches many aspects of a company – from marketing to supply-chain
management. It requires a thorough understanding of the business fundamentals and
strategy, as well as the government and policy regulatory landscape driving the
initiatives. The literature review traces a history of the building blocks of CSR, which is
crucial as it brings to the forefront the fundamental question of the role of business in
society. Public relations has the opportunity to take its vantage point and help bridge the
various departments that CSR efforts touch, but it needs to help map the message across
the company to keep communication efforts clear and consistent. The research also
highlights the reason why this is so relevant and timely. Corporations are at a crossroads,
being pushed and pulled from a multitude of stakeholders. The literature demonstrates
that the business community, from academics to professionals, is trying to push the
movement toward “shared value.” CSR is moving toward integrated reports and
constantly in flux as challenges present themselves. Yet communications efforts are still
behind in understanding a way to address challenges faced and there remains a gap in the
communications function within the current context of CSR.

26
Chapter Three: Contextual Analysis of CSR
An important aspect of corporate social responsibility is the environment in which
it currently exists. The information revolution, declining faith in the public sector,
growing concern for the environment and the coincidental ascendancy of the
transnational corporation and global brand is putting companies on the frontlines of
public scrutiny (Bhattacharya et al, 2011). This chapter will highlight how key economic,
societal and political shifts impact CSR communication.
The financial crisis of 2008 rocked the public’s trust in corporations and threw
many evolving CSR projects into disarray. The financial crisis resulted in a negative
cloud over the some of the work that had been done in CSR up to that point. If
corporations had failed to effectively regulate themselves even in their core areas of
business, how much less could be expected in effective self-regulation in the area of
CSR? This left many companies in a unique bind. At the same time that the public’s trust
in corporations had ebbed, the public’s expectations had soared. The Edelman Trust
Barometer 2011 report demonstrates this erosion of trust:
In the wake of the recent financial crisis, we are seeing fundamental
changes in how we view traditional institutions. According to our 2011 trust
Barometer, trust in corporations and governments has eroded around the world,
specifically in developed markets. Meanwhile, stakeholder expectations have
evolved. In our 2010 goodpurpose® study, we found that worldwide, 86 percent
of consumers now believe that companies should place at least equal weight on
societal and business interests. The new evolved form of public relations is
public engagement.
27
As trust has eroded and expectations have risen, CSR has become a point of
vulnerability for corporate reputation. Corporate reputation is a dynamic, multi-
dimensional concept built on the perceptions of past behavior and a reflection of future
expectations (Visser et al, 2010). In today’s landscape, where intangibles can drive
market capital, reputation has risen on the corporate priority list. This is especially true
for companies like Microsoft, whose brand is valued at an estimated $42.8 billion (Brand
Finance “Top 500 Brands,” 2011). The brand is a special intangible because of the
economic impact it can have. An effective brand can be a source of competitive
advantage, differentiation and influence purchase intent (Fan, 2005). In a world of
abundant choices, such influence is crucial for commercial success and creation of
shareholder value. Reputation in the context of CSR is based upon perceptions of how a
company operates and interacts with its stakeholders, from exposing the treatment of its
workers to the level of involvement in engaging with communities. Companies like Nike
that have invested into developing their brand can be more susceptible to the risks of not
effectively communicating CSR. With an estimated brand value of $18.4 billion (Brand
Finance “Top 500 Brands,” 2011), how Nike’s CSR efforts are perceived plays a critical
role in reputation building. Brands like Nike face pressure specifically for the very brand
awareness they have worked to protect and maintain–it becomes both a strength and
potential liability. This is because well-known brands can serve as targets for advocacy
groups or governments trying to address societal issues (labor rights, climate change,
etc.) they may perceive as being compromised by a certain industry. And unless a brand’s
28
CSR efforts can be managed and integrated into genuine communication efforts, the
weakness may overcome any strength the brand has.
A company may pursue a laudable and viable policy of trying to reduce its
carbon emissions. But in the current climate, the public may be unforgiving if a firm
misses its mark, even slightly. Interbrand, a global brand consultancy, stated in a recent
report (2011) that Nike has “worked aggressively to improve its CSR image through
sustained action, including establishing codes of conduct for every factory manufacturing
Nike products and assigning an internal team to ensure that it is enforced.” Despite these
efforts, the brand recently came under fire from environmental groups, along with other
apparel manufacturers, for the use of toxic chemicals in its supply chain, among many
other complaints. Consumers are demanding transparency and more ethical behavior that
goes beyond philanthropy and environmental promises. They want more ethical supply
chains and more transparent corporate governance. These demands put a critical
emphasis on the way companies must define and engage with their stakeholders on their
CSR efforts.
Although there is this broader public shift in how companies interact with society,
there is an inherent tension between responsibility and profitability. USC Marshall
School of Business Professor Adlai Wertman, in an interview for this project, noted that
there has been a rise in CSR that has grown out of three basic motivations: risk
management, employee benefit and corporate philanthropy. Given the current external
challenges CSR is facing, it is “tough to balance [being] responsible and profitable”
(Wertman, personal communication, January 18, 2012). Companies are increasingly
29
expected to assist in addressing many of the world’s most pressing problems, including
climate change, poverty and human rights. This is not just an externally held belief; many
companies themselves have embraced these goals as well. According to a McKinsey
(2009) survey of CEOs, 95% believe that society has higher expectations than it did five
years ago for companies’ responsibility toward the public.
The current landscape is full of points of tension among people and the way they
view corporations. The Occupy Wall Street movement has called attention to the dismal
economic situation facing consumers/stakeholders. In 2011, people mobilized against
Bank of America and Netflix to protest fee changes (Reichheld &Markey, 2012). The
relaxing of campaign finance rules that resulted from the Citizens United decision has
brought increased scrutiny on corporate political contributions and how they influence
political processes (Business Insider, 2011). This has sparked a contested debate over the
“citizenship” status of corporations.
These increased public expectations get magnified with the influence of
social media and online resources. The rapidly changing media landscape now requires
that companies disclose more information about their sustainability and corporate
responsibility practices than ever before. This information is becoming more easily
accessible. Organizations like the Carbon Disclosure Project (CDP) work with
shareholders and corporations to disclose the greenhouse gas emissions of major
corporations, providing information that is much more accessible and integrated. This
information is much more accessible and integrated (Carbon Disclosure Project, 2011).
For instance, as Ernst & Young’s “How Sustainability has Expanded the CFO’s Role”
30
2011 report states, Bloomberg integrates CDP data into Bloomberg terminals worldwide–
making many companies’ climate-change data available to socially responsible
investment funds, competitors, financial media and others at the click of a mouse (Ernst
& Young, 2011). As a result, companies can no longer be reactive. The prevalence of
social media and online tools coupled with the collection of this type data calls for
companies to be proactive in the information they present (Coombs & Holladay, 2011, p.
112).
It is a unique moment in which to analyze this field. There have been numerous
recent examples of corporate entities being caught acting irresponsibly, recklessly or
unethically. Several industry studies illustrate there has been a serious loss of trust and
confidence in business. CSR has unfolded from a philanthropic endeavor to an
operational process that has critical consequences for the reputation of a company.
Corporate reputation is one of the most common drivers pushing companies to address
CSR issues. Several surveys by McKinsey and by the UN Global Compact (led by
Accenture) have shown that strengthening reputation and trust are key motivators for
companies involved with sustainability. Among the CEOs interviewed in the McKinsey
study, 72% cite “brand, trust and reputation” as one of the top three factors driving them
to take action on sustainability issues (McKinsey, 2011).
Also on the horizon is a push toward greater regulation of company operations.
Sarbanes Oxley (2002) began to change the regulatory landscape for corporations, as
transparency and corporate governance were put at the forefront of the SEC’s agenda
(Marcus, 2005). Now, especially after the 2008 financial crisis, the U.S. government has
31
made a greater effort to ensure transparency and accountability from corporations (U.S.
Securities and Exchange Commission, 2011). As will be outlined in a later chapter,
regulation of companies is happening at both the state and federal level in a variety of
sectors. Regulations can complicate how companies communicate: if they are forced to
disclose more information, they cannot attribute their efforts to their “voluntary
goodwill” in the same way as before, and it potentially muddles the messages they are
trying to convey to stakeholders. Regulation forces companies to re-assess what is
considered material, decide where it belongs in the company’s reporting, and how to
incorporate it into its existing framework.
These factors create an array of even greater challenges for CSR communications.
In the context of more public scrutiny, a hyper-transparent media landscape and increased
regulatory risk, a well-executed CSR communication effort could make all the difference
in protecting a firm from public scrutiny and in furthering its bottom-line goals. There is
no better moment for communications to be the bridge between stakeholders and the
company.

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Chapter Four: Communication Challenges
The research carried out illustrated that while more companies are seriously
focusing on communicating with their stakeholders about corporate social responsibility,
there remains a surprisingly high degree of unfamiliarity, confusion, doubt and even
wariness among stakeholders about what exactly a company is doing and why.
Companies are essentially failing to tell their story effectively, both externally and
internally. As illustrated in the Forbes article, “Pain of Sustainability,” companies
struggle to inform stakeholders about how they are managing material, social and
environmental issues (Epstein-Reeves, 2012). Some companies overstate their impact.
Other companies, out of fear of being attacked, understate their accomplishments or wind
up not communicating at all. This section aims to uncover challenges in communicating
CSR.
Various interviews were conducted from August 2011 to February 2012 with
thought leaders in the field. All of the interviews helped shape the research, particularly
the initial interviews that guided the direction of the research. Out of the seven interviews
that were selected and referenced throughout the thesis, the backgrounds of the
interviewees provided distinctive insights to different parts of the CSR field.
33
Table 1: Interviews Conducted
Interviewee Company/Industry
CB Bhattacharya Author & Professor
Dave Quast FTI Consulting
Kirk Stewart APCO Worldwide
Jack Ucceferri Harrington Investments
Aldai Wertman Professor
Subject A Global Entertainment Company
Subject B Global Clothing Retail Company
Two of the interviews gave an inside look at two Fortune 500 companies’ work in
CSR. Both of those interviews were conducted with representatives (who asked to remain
anonymous) who work specifically in the CSR department of their company. These
interviews were extremely insightful as they drew similar conclusions: the field is gaining
traction and CSR departments are looking for ways to provide more rigor and
effectiveness to their work. Communications for them works best when CSR
communication happens in the CSR department with appropriate coordination among
other company departments (such as marketing, investor relations, etc.). Three interviews
drew on academic and professional insight. These interviews helped supplement the
industry and academic research on the subject. Lastly, two interviews were conducted
with professionals in the investment community – one from a socially responsible
investment firm and the other from a financial communications consulting firm. These
interviews spotlighted the importance of the integration of financial and sustainability
34
data. They also gave insight to some of the motivations that tend to drive CSR activities
undertaken by companies.
Effective communication needs to include both the rationale (motivation) behind
the CSR engagement and the specifics of how the programs operate. As Bhattacharya
states in Leveraging Corporate Responsibility (2011), “CR strategies need to bring
consumers and employees close to a company’s CR and ultimately to the company” (p.
186). Stakeholders need to know what a company is doing and why exactly is it involved
in CSR. Understanding how to define CSR within the confines of an industry and
company also present a challenge. How a company defines its efforts sets the tone for
how it crafts the story amongst its stakeholders. As more stakeholders come to the table,
it is critical to have a better understanding of who a company needs to be communicating
with.
Reporting has been a key tool to help meet these communication demands. In
hopes of showcasing their CSR work, companies have taken on more reporting.
However, for those actively trying to report, it is not necessarily easy. Reporting efforts
can be overwhelming. The Global Reporting Initiative (GRI) is a multi-stakeholder,
multi-national organization that sets standard guidelines for what and how companies can
and should publicly report (Global Reporting Initiative, 2011). Despite being a
tremendously valuable tool, the guidelines themselves still do not offer solid guidance on
how companies should prioritize issues. There are more than 80 “core” indicators the
GRI suggests companies should report. It can be a difficult task, no matter how large the
company, to effectively manage 80+ issues (Epstein-Reeves, 2012). Moreover,
35
companies’ own indices and matrices cane be just as cumbersome and confusing –
especially to external stakeholders.
Arguably one of the most crucial challenges for CSR communication is that
communication about CSR often breeds public skepticism. Some literature suggests that
CSR communication is not always beneficial for organizations because of the skepticism
around it (Lindgreen & Swaen, 2010). This is what Coombs & Holladay refer to as CSR
promotional communication dilemma (p.110), where stakeholders want CSR information,
yet corporate messaging can create backlash when stakeholders see it as overly self-
promotional. There can be good reasons, both of an ethical and pragmatic nature, for
choosing a minimalist approach to CSR communication instead (Morsing et al., 2008).
Still, not communicating is not an option. The public often interprets silence on CSR
matters as being significant.
If stakeholders do not know about a company’s CSR activities it becomes difficult
for them to react to these actions in any manner–favorably or unfavorably. If a CSR
initiative is not salient to stakeholders, it will likely be ignored by them and produce no
benefit to the corporation (Coombs & Holladay, 2011). Stakeholders respond when they
see tangible actions that respond to their concerns, not symbolic actions with no
verifiable impact. Thus, at the bare minimum, to elicit favorable reactions from their
stakeholders, companies must ensure that their stakeholders have an accurate and clear
sense of what the company is doing in regards to its CSR.
These communication challenges interrelate and overlap, but each presents a
unique insight into the importance of understanding and overcoming pitfalls related to
36
CSR communication. The case studies below analyze different aspects of CSR
communication, from message content and communication channels, to company and
stakeholder-specific factors that influence the effectiveness of CSR communication. By
building a CSR framework that draws upon addressing and overcoming some of the key
communications challenges, CSR programs can be more effectively developed and
executed.
37
A Framework for Evaluating CSR Communications
The four key communication challenges that are outlined in the case studies
encompass the following: understanding and communicating motivation; how each
company defines CSR; how each company defines and segments the audience; and how
each company utilizes reporting to best meet company and stakeholder needs. This is
outlined in the model below.
This model was created by the author on the basis of the secondary research, and was
used as a framework for evaluating the case studies:
Table 2: Framework for Evaluating CSR Communications
Communication
Challenge
Method of evaluation
Motivation Analyzing company motivation considered: stated CSR mission and
where it was located on their website; reports and releases of
information; and evidence of the reception of company efforts in the
media
Definition Analyzing how organization defined CSR considered: articulation of
the definition of CSR efforts (i.e. is it generic or very specific to the
company); alignment of the CSR term used with the corporate
mission; and whether the CSR definition a company uses is
congruent with the company’s efforts in CSR.
Audience Analyzing audience definition and segmentation considered:
mention of stakeholders; how they were defined; where they were
communicated to; and what information was explicitly directed to
each stated audience.
Reporting Analyzing utilization and execution of reporting methods
considered: both financial and non-financial company reports; level
and extent of reporting – this included the level of integration in
reports, the level of sophistication, the metrics used, and the clarity
of reporting.
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Chapter Five: Motivations
One of the primary objectives of CSR communications is to convey the
appropriate motives for CSR actions. What an organization says about CSR acts “as a
mirror into their motivations and intentions,” (Hartman, et al. 2007, p. 373) and
disseminates a set of promises that it must then meet. This notion poses a
communications challenge, however. Before a company attempts to live up to any
promises, it must clearly communicate an understanding of what its responsibilities are.
This understanding requires an assessment of the company internally, and balancing that
with what is then communicated and demonstrated externally. This chapter illustrates the
impact various motivations can have on how CSR is enacted, communicated and
perceived. In order to analyze the possible CSR motivation of each of the companies
analyzed in the case studies below, the following were considered: stated CSR mission
and where it was located on their website, reports and releases of information, and
evidence of the reception of company efforts in the media.
Considering possible motivators for communication raises several questions:
What are stakeholders asking of this company? What external pressures is the company
facing? For example, a company pursuing CSR in order to meet regulatory requirements
might need a different approach than a company pursuing CSR in order to cut costs
through more sustainable operations (i.e. Coca-Cola reducing water waste). In effort to
reduce the risk of regulation, a company must have a forward-looking approach and must
communicate that it is voluntarily compliant and going above and beyond anything
regulation would require. However, cost cutting through sustainable operations can also
39
help craft the message of “shared value,” such as when reducing water waste helps save
money and also contribute to environmental initiatives.
Other questions also arise: Is the motivation to sell in a foreign market where the
company’s factories currently operate? Are they trying to improve brand reputation? Is
there an investor push? Are they lagging behind competitors? For example, up until 2012
Apple had never released a list of its suppliers. A 2011 article in Forbes, “Where is
Apple’s Social Purpose?” asked how a company as extraordinary as Apple could be
missing in action on corporate social responsibility. Apple released a list of suppliers this
year (2012) under the mantra of creating a “responsible supply-chain.” The likely motive
for Apple, though, was to not fall behind competitors that currently report this
information and to respond to media pressure. Apple’s motivation appears to be an effort
to maintain their competitiveness and they have communicated in a way that shows they
are not only compliant but really ahead of the curve. This concept of CSR motive is
especially important in an industry like technology, which is marked by competition and
innovation.
While competitors Dell, IBM and HP have received high industry ratings for
emission reduction and transparency (from RiskMetrics, CERES and the Carbon
Disclosure Project), Apple has lagged in submitting meaningful data for public
evaluation. Since releasing its list of suppliers in early 2012, Apple appears to have been
motivated to respond reactively because of news-cycle pressure.
Apple appears to have had a similar struggle with CSR communication in the
past. It was not until 2007 that Apple released its first sustainability report to address
40
looming supplier concerns. However, it was not met with much enthusiasm. It was a very
brief (only 4 pages) report in comparison to their most recent report. The company also
demonstrated a somewhat reactive stance in the summary of their first report:
In the summer of 2006, we were concerned by reports in the press alleging poor
working and living conditions at one of our iPod final assembly suppliers in China. In
response, we conducted a thorough audit of the facility and worked closely with the
supplier to correct any practices or incidents that did not conform to our Supplier
Code of Conduct. (Final Assembly Supplier Audit Report, 2007)
This statement illustrates that they were likely motivated by perception issues and likely
concerned with media reports. The company’s first CSR report was presented in
paragraph form, with no data or charts to demonstrate the efforts they described. Some of
the concepts were ambiguous and no real data was presented to allow for follow-up or
even traceability. For instance, they reference their Supplier Code of Conduct; yet never
actually reveal what it is.
For the Coca-Cola Company, there appears to be motivation by the concept of
shared value. Their 2020 vision for sustainable growth puts emphasis on the importance
of doing business sustainability (Coca-Cola, 2011). It appears that CSR is more than just
regulatory compliance or an effort to stay on par with competitors. They convey the
impact their business operations have on the environment and how important it is to
preserve those very resources they need. Unlike some of their competitors, Coca-Cola’s
motivation does not appear in pursuit of some other agenda that conflicts with their
fundamental business. So, while Coca-Cola can support healthier products in their brand
line, they do not appear to be motivated to pursue their CSR efforts in that way. There is
a certain level of importance in this approach. It conveys honesty about social and
41
business motives – the concept of frankly acknowledging that its CSR endeavors are
beneficial to both the society and itself. Unlike Apple, Coca-Cola actively defines what
CSR means to the company and includes various methods in which they communicate
and define this. They include their 2020 CSR vision in their annual report to
shareholders, emphasizing the financial benefits they see in their CSR work. They also
make the effort to explain how their efforts in CSR relate to the company and its various
stakeholders (Coca-Cola, 2011).
At some level, motivation and self-interests co-exist. For example, Coca-Cola can
support water supply-chain management for operational and reputational purposes.
However, if motivations are not clear, communications efforts on CSR can come off as
simply a PR “ploy.” In other words, if CSR yields improved profits, are those a collateral
benefit or the main point? Many CSR communication efforts are little more than
campaigns designed to promote corporate brands by creating the appearance of being
“good corporate citizens” (Porter et al, 2007). For example, campaigns like Yoplait’s
“Lids to Save Lives” and Pamper’s offer to pay for a tetanus shot for a pregnant mother
in Africa for every package of specially marked diapers sold, boast company involvement
in social-causes, yet do not move past the cause-marketing approach. As Porter et al
(2007) emphasizes, this kind of activity results in investments that deepen public
cynicism and fail to generate real social change.
However, Apple’s outlook for effective CSR is not necessarily grim. Coca-Cola
was very much motivated back in 2005 by the same pressures Apple is facing now. In
2005, activists targeted Coca-Cola over the issue of water. As The Economist’s “Coca-
42
Cola in Hot Water,” reported, the company was hit hardest in India, where allegations
were that some of the firm's bottling plants used too much water in drought-prone areas,
thus leaving poor local villagers with too little water. Its inept handling of accusations left
the firm exposed to a much more damaging allegation: that it was aggravating the
growing global problem of fresh-water scarcity. Coca-Cola has since taken the lead in
measuring water usage through its value-chain; for example, in how much water is
needed to produce the sugar used in Coca-Cola and in seeking ways to offset
consumption, e.g. by supporting natural water conservation schemes. Apple has a similar
opportunity in becoming a CSR leader in the technology sector in making its supply
chains more transparent, sustainable and ethical. In fact in February of 2012, Apple
became the first technology company to join the Fair Labor Association. Apple’s
decision to join FLA sets a new standard for the technology industry and could signal
more technology companies to follow their lead.
Motivation reflects an internal communications dynamic that is then reflected in
external communication efforts. How a company delineates their motivation impacts their
reputation and brand, as well as how company CSR efforts are perceived and interpreted.
Corporate social responsibility communication can have a backlash effect if stakeholders
become suspicious and perceive predominantly extrinsic motives in companies' social
initiatives (Bhattacharya et al, 2010). Apple is currently feeling that backlash and would
be well served to make the effort to become the industry leader in CSR and craft their
motivations through this prism.
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Chapter Six: Definitions
This section aims to analyze how two different companies’ definitions of
corporate social responsibility shape the work they do and how this work is perceived.
The different terminology and definitions of CSR send mixed messages about what the
field actually does. This lack of clarity makes it difficult to know whether CSR is relevant
to an organization or company. To best analyze how each company constructs a
definition of CSR, various factors were considered: articulation of the definition of CSR
efforts (i.e. is it generic or very specific to the company), alignment of the CSR term used
with the corporate mission and whether the CSR definition a company uses is congruent
with the company’s efforts in CSR.
For instance, Disney defines CSR as citizenship, stating on its corporate website:
At Disney, we believe that being a good corporate citizen is not just the right thing
to do; it also benefits our guests, our employees and our businesses. It makes the
Company a desirable place to work, reinforces the attractiveness of our brands and
products and strengthens our bonds with consumers and neighbors in communities
around the world. (Disney, 2011)
By definition, Disney must ensure that its efforts and initiatives are in sync with how they
view and define themselves in this space. Although Disney had been doing work in CSR
before and had been putting together environmental reports, it was not until 2009 that it
formalized a department within the company and released its first “corporate citizenship”
report in 2010. In their 2011 report they state, “at Disney, citizenship is more than a set of
guidelines or focus areas; it is an integral part of our businesses and our growth strategy.”
This concept of citizenship is illustrated by their CSR leadership structure. The Chief
Financial Officer at Disney is responsible not only for the company's finances, but also
44
for citizenship performance. This suggests the company considers its financial
performance is inseparable from its performance as a corporate citizen.
One of the areas Disney is focused on understanding the role of corporate political
contributions. This aligns with their definition of citizenship and reflects the way they
think about themselves as a company. Citizenship captures the wide expanse of the
company’s operations, from theme parks and resorts to media and retail products. For
Disney, citizenship appears to be more proactive. Citizenship relates more to their role
outside of the company, whereas “sustainability” looks more toward internal integration.
Their focus seems to be to maximize efficiency and minimize environmental impact.
Pepsi, on the other hand, focuses on sustainability, as stated on its corporate
website: “At PepsiCo, Performance with Purpose means delivering sustainable growth by
investing in a healthier future for people and our planet.” This has been a pivotal point
for PepsiCo’s CEO Indra Nooyi, who has focused on integrating “healthy” initiatives into
the company’s CSR efforts. Her long-term strategy has been to make PepsiCo's "nutrition
business" a much larger part of the company's portfolio than it is today (Seabrook, 2011).
The company’s core business and their brand, however, may not necessarily reflect these
efforts. Pepsi is the second-most-recognized beverage brand in the world after Coke. This
does not make the transition of the company into healthier food very easy. A piece in the
New Yorker, “Snacks for a Fat Planet,” highlighted the paradoxes and questionable
efforts in Pepsi’s CSR initiative. The article illustrated hesitance among investors and
consumers and a lack of congruency in how their efforts were received (Seabrook, 2011).
Analysts also echoed these sentiments. The Financial Times wrote several pieces
45
capturing this analyst sentiment. In “Pepsi Chief Faces Challenge to Revive Fizz,” Ali
Dibadj, an analyst with Sanford Bernstein stated, “They have to realize that at their core
they are a sugary, fatty cola company, and people like that.” (2011). In an attempt to
communicate their efforts in sustainability to build a “healthier planet” they left an
incongruent sentiment amongst shareholders and consumers.
Furthermore, Pepsi’s attempt to communicate their CSR efforts through their
Pepsi Refresh Project in 2010 was met with backlash. The Pepsi Refresh campaign was
designed to give away more than $20 million in the U.S. to fund good ideas, big and
small, to move communities forward. However, it apparently not only did it not sell the
product, it also left stakeholders confused as to what Pepsi was trying to do (Seabrook,
2011). The Refresh project exemplifies how CSR can breed skepticism. Forbes’ article
“Pepsi Refresh' Is Not PepsiCo's True CSR Effort,” emphasized that “for all the media
attention gained by its efforts, the Refresh Challenge in no way affects the human rights
issues at the core of PepsiCo’s actual line of business (Mehra, 2010). This type of
blurring between cause marketing efforts used as CSR can create confusion and
apprehension toward the company’s CSR work and the broader concept of CSR.
PepsiCo’s experience highlights a point of tension in this field: A conflict exists
between the need for companies to define what CSR means to them in their unique
context versus the need for the general public to have an accurate understanding of what
CSR is for and about. Companies need to define CSR as it relates to their industry and
then transmit this to their very different sets of stakeholders. This requires them to
establish what corporate responsibility means to them, what their focal areas are, what
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integrations exist with their business, and what risks and weaknesses they face. One
example of an attempt to convey their notion of citizenship was when Disney announced
in October of 2011 that they were modifying their annual disclosure of political
contributions – reflecting the company's ongoing commitment to maintain high corporate
citizenship standards and transparency. In their citizenship report they even discuss the
policy issues of interest to them, which included: protection of intellectual property;
broadcast, cable and internet regulation; freedom of expression; free and fair trade; travel
and tourism; privacy; and economic development including appropriate taxation.
Defining CSR and what it means to a respective company is critical because it
sets the stage for what its CSR vision and strategy will be. The choice of words
companies employ to define their CSR strategy can also present communication
challenges. If it is called “sustainability,” will this mean a focus on resource scarcity? Or
if by dropping “social,” is the focus solely on corporate governance? With all of these
various terms defining CSR floating around, it can be tough to work through what it all
means.
There are two forces at odds here: companies accurately and honestly defining
CSR in a way that genuinely describes their endeavors and coming to consensus on what
responsibility means across a broader platform. Defining sets the stage and leads to
congruency not just within business operations, but also among the other components of
communication efforts. Having a clear definition will then allow companies to clearly
delineate their motivations and identify to whom they should be reporting and what they
should then be reporting.
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Chapter Seven: Audience
Figuring out who the proper audience is for CSR efforts is becoming increasingly
important. The basic risk in communicating about CSR is exacerbated by companies’
need to communicate their CSR information to multiple stakeholder groups of varying
importance, with varying expectations, needs and levels of involvement. Many
discussions on CSR highlight how consumer “consciousness” is putting pressure on
companies to act more responsibly. But are companies’ CSR communications really
geared toward that consumer audience? Data-rich reports that most companies use to
communicate CSR activities seem geared primarily for more industry-focused audiences
like investors and NGOs. As more robust CSR efforts are implemented, audiences need
to be better defined and levels of engagement need to be raised.
This section draws upon case examples to illustrate how some companies are
structuring their communications around their stakeholders. In order to analyze each
company’s approach to its audience, the following issues were assessed: mention of
stakeholders, how they were defined, where they were communicated to and what
information was explicitly directed to each stated audience.
It seems most consumers and even employees continue to remain in the dark
about what companies are doing in the CSR arena. Of the 20 attributes measured in
Harris Interactive’s annual corporate reputation study published by the Wall Street
Journal, most data indicated people are most in the dark about a company’s corporate
responsibility activities (2011). This is due largely to the fact that most companies today,
while experts at communicating about their products and services to the public, still seem
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uneasy about publicizing their CSR actions in a sustained and carefully coordinated
manner to their stakeholders. As Bhattacharya points out, “at the heart of this hesitance
lies the widespread, persisting and not entirely erroneous belief that even CR actions
become ubiquitous, proactively telling people about a company’s CR poses a set of risks
that is unique to this domain of company action” (2011, p. 48). This means some
precautions must be taken, because not all stakeholders can be addressed in the same
way. Foremost among these risks is the concern that (in contrast to communication
surrounding products and services) CSR communication can produce heightened
skepticism about the company’s intentions and actions, causing it to sometimes backfire
on the company in terms of negative stakeholder reactions.
To elaborate, when a company advertises its products and services, consumers
typically do not ask why a company is doing so. Everyone expects a company to work
hard to tell people about what they have to offer. On the other hand, when a company
tells consumers about its CSR actions – one of the first questions is “Why is this
company telling me this?” There can also be a tension in creating an internal culture that
is supportive of external transparency. This requires effectively communicating CSR
impact internally to employees and management.
Timberland is an example of a company that takes an active approach to serving
different stakeholder needs. For example, their website is set up to help different types of
audiences easily access the information they need– in a way that is tangible to them. In
2011, after announcing its new set of revised sustainability goals, Timberland launched a
new CSR communications portal (Timberland, 2011). This portal allows for different
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stakeholders to access the site quickly and easily without having to comb through a dense
report to find the information they are seeking. They even have a section that segments
their different stakeholder groups and provides links and content relevant to them. The
company has since started releasing quarterly CSR data and trends in newsletter format,
to mimic its quarterly financial report structure, while keeping stakeholders up to date on
a more frequent basis. Timberland was also the first company in the industry to post the
carbon footprint of the shoes it sells right on the box (Reuters, 2011). This indicates their
effort to integrate CSR into their core operations, even at the consumer level, making
CSR part of general marketing, as well.
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Figure 2: Timberland CSR communication portal

(Source: Timberland, 2011)
Not all companies, however, are using a universal web portal to communicate
about their CSR activities. An interview for this project highlighted a global clothing
retail company’s strategies in reaching their many different stakeholders (personal
communication, Subject B, February 10, 2012). Their approach lies in segmenting their
audience, as well as the communication channels they are using to reach them– which
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had never really been done well before by the company. As they noted, a 200-page report
cannot and will not serve every audience. Though segmenting may seem rudimentary, the
CSR manager emphasized its importance because it means coordinating the
communication silos that can develop among marketing, investor relations, public affairs,
etc. For instance, as they look ahead toward integrated reporting that incorporates both
financial and CSR data, they need to ensure there is real coordination of the content in
order to demonstrate sustainable reporting’s programmatic and operational value. As they
move forward, they want to ensure a CSR communication strategy is embedded across
various departments.
Ford Motor Co. is an example of another company that is making progress in
segmenting information across to different audiences. For example, on their corporate
website they have incorporated their supply-chain-management efforts not under
sustainability but under investor relations – indicating the importance of demonstrating
CSR’s value to their investor audience. Had they listed it under the sustainability section
on their website, it would have signaled that this is a part of their overall sustainability
initiative, which may or may not be as relevant to investors. By displaying it where they
did, Ford reduces the ambiguity of their intended audience. They want their investors to
see this information and therefore display it in such a way that reaches them.
According to SustainAbility’s “Tomorrow’s Value: The Global Reporters,” Ford
Motor Co. was the only automaker among the top 25 of companies demonstrating best
practices in corporate social responsibility in 2006. This demonstrates their ability to
engage with necessary stakeholders that likely contributes to their overall success in
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CSR. Ford is proving to both investors and advocacy groups that their model of
sustainability is both profitable and innovative. There is also risk in over-segmenting; the
potential of not reaching everyone properly – leaving out other stakeholders – by only
focusing on the stakeholders closest to the core CSR activities. Efforts must be made to
ensure that appropriate overlap is reached at both the brand and corporate level. By
focusing on the “traditional” CSR audience, Ford may be unintentionally leaving out a
critical audience – customers. Customers are not incorporated in CSR communications in
the way that companies like Timberland are clearly doing. Ford would likely benefit by
ensuring that its CSR communication is accessible to all of its core audience.
The challenge in communicating CSR to a diverse audience lies in balancing
competing stakeholder interests while still maintaining a broad consistent message.
Companies must find ways to get information to stakeholders through the appropriate
channels. Should companies want to attract consumers to reporting, there should then be
an effort to educate them along the way about issues.
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Chapter Eight: Reporting
It is likely that many companies are still not clear about incorporating CSR into
their business, let alone reporting on these efforts. Companies are pressured to
communicate all things to all people but need to focus on the issues most relevant to their
business and to particular stakeholders. The issue of reporting involves knowing what
metrics are appropriate to the company and what stakeholders are looking for in a report.
There is no one-size-fits-all strategy. As the earlier chapter on definition (chapter five)
indicated, reporting is a critical component to overall CSR activities. This section will
provide a more in-depth analysis to CSR reporting, discussing several challenges in
communicating CSR through reporting efforts. In order to analyze reporting methods,
both financial and non-financial company reports were scanned for key information that
demonstrated the level and extent of reporting. This included the level of integration in
reports, the level of sophistication, the metrics used, and the clarity of reporting.
In the early 1990s, as sustainability reporting began to evolve, NGOs, investors,
and other stakeholders responded with long lists of issues they wanted reported. Not only
did this make some reports unreadable, there was also a real loss of connection between
the company's core commercial purpose and its sustainability reporting (Tuppen, 2011).
This brings forth various challenges and questions: Is sustainability reporting the same as
CSR, environment, social and corporate governance (ESG), or citizenship reporting? And
who is actually reading these reports? Should a company release a formal report, how
often, and to whom? The varying level of reporting reinforces that absent strict CSR
reporting regulation, this is still a self-directed/self-regulated practice. For example, the
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Gap Inc. has received backlash because they only release a report every two years –
unlike other competitors that release reports annually or some that have issued quarterly
reports (Godelnik, 2011). While some may advocate for more frequent reporting, The
Gap’s strategy calls for a different approach. Their goal with reports is targeted toward a
systemic shift in corporate behavior. For them, they cannot map meaningful change in 12
months or less; that time frame does not allow for a rigorous approach in CSR activities
to fully play out.
An analysis of reports from The Gap Inc. indicates the company does not
encapsulate the entire CSR work that is done beyond reporting (The Gap, 2011). The
report is merely a reflection of the work being done. This demonstrates a clear tension
between reporting and actually doing the CSR work. Issues that are being worked on
through CSR are long-term initiatives that cannot be simply pushed out through
communication channels for the sake of merely distributing information. This is can not
only be overwhelming and a burdensome to the staff, but it could also prove fruitless in
providing any real value to the company and its CSR efforts. The mantra of reporting
should have a clear track of progress over time and reinforceable links between
sustainability and business strategy. It also must address information at the right level of
knowledge for the targeted stakeholder group, ensuring that the performance metrics
actually mean something to the person reading them. This means that CSR
communicators must differentiate what they convey in the actual “report” versus in others
types of mediums that represent the universe of “reporting” around their efforts.
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Bank of America, which just started reporting their CSR efforts last year (2011),
has also come under scrutiny. An analysis of the company’s report indicates focus on
Bank of America's efforts to promote "fairness and transparency in its products and
services," as well as "lending and investing activities in low-income and underserved
communities" and "community-focused philanthropic investments," according to a press
release issued by the bank (2011).
Most sustainability reports incorporate anecdotal, feel-good stories that might
detract from the core messages and data. The constant flow of information can create a
push-pull conflict with communication efforts. Ideally, there needs to be a direct link
between qualitative narrative and quantitative data. This requires a company to turn their
once-a-year report into more robust, timely, and effective CSR communications that
delivers information that is relevant to stakeholders. For instance, consumers can be
engaged on a more daily basis through social media channels, and an investor can have a
place to go within the investor website that provides more focused information. The Gap,
for example, attempts to address this issue with its “report builder” function on its
website, which allows people to select the content they wish to include and build a report
that is relevant to a specific audience’s need (http://www.gapinc.com/content/csr).
An interview conducted for this research detailed a global clothing retail
company’s work in reporting (personal communication, Subject B, February 10, 2012).
They mentioned that there had been such a disconnect in their reporting that they were
overhauling their entire reporting strategy and process this year. They also stated that
there had been a shift in applying more rigor toward sustainability reporting. This
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interview emphasized the importance of applying third party assurance – which can add
much needed accountability to the process.
Additionally, KPMG Partner Peter F. Minan, the U.S. firm's audit leader for
Climate Change & Sustainability, stated in the firm’s annual CSR report that data quality
has become an issue as more companies seek to deliver their CR information to
stakeholders, particularly among larger, more complex organizations. “Assuring the
accuracy of this non-financial data becomes critical as more companies work to include
CR information in their annual reports to shareholders,” said Minan (KPMG, 2011).
Ultimately, a combination of financial and CSR reporting and how they relate to each
other would represent a more comprehensive approach to reflecting a company's full
business performance in delivering on its CSR strategy.
An even bigger issue for companies can be finding a way to measure the impact
their CSR activities are having. Those who do measure may often be measuring the
wrong things. Bank of America received criticism for their first CSR report from
environmental groups who were less than satisfied with the data presented (Sartor, 2011).
The company attempted to highlight its much publicized Environmental Business
Initiative, which was started in 2007 and commits Bank of America to spending $20
billion over 10 years to address climate change through their lending, investing, products
and services (Bank of America, 2011). The report showed that as of 2010 Bank of
America had spent $11.6 billion of that $20 billion on a series of investments that were
not specifically listed in the report and did not appear to be on the company’s website
either (Sartor, 2011). This lack of transparency makes it hard to thoroughly analyze the
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impact of Bank of America’s Environmental Business Initiative investments. Instead, the
report leaves readers wondering what the information the company provided means and
how it actually applies to their Environmental Business Initiative (Opportunities in
Motion, 2011).
Issue-focused strategies need to include outcome-focused systems of
measurement that are recognized as the best practices in a company’s field. For example,
an environmentally focused CSR program needs to be evaluated by the best impact-
measurement practices in the environment field. It is also important to highlight both
successes and failures/challenges. This provides an honest, realistic context in which to
interpret a company’s actual CSR performance.
Alongside regulation, compliance information also needs to be incorporated into
the reporting structure. This becomes problematic because the message may leave
stakeholders uneasy. Investors want to avert risk and advocacy groups want more than
just compliance. The fundamental problem is that disclosure requirements merely get
information onto the table, but demand no further action. As the New York Times article
“I Disclose…Nothing” highlights, some political theorists maintain that disclosure is both
a citizen’s right and a tool to ensure good government and consumer protection, because
it provides information that leads to informed decisions (Rosenthal, 2012). Instead,
disclosure has often become an endpoint in the chain of responsibility. Part of the
problem is that the goals of disclosure are often unclear; people may want the
information, but often no one knows exactly what to do with the information once they
get it. Jack Ucceferri, of Harrington Investments, states that the challenge with CSR
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reports for socially responsible investment (SRI) firms is that publicly traded companies
do not have the correct corporate governance structure to be “honest” (personal
communication, January 25, 2012). This makes their firm wary of information they
receive directly from companies.
Reporting is currently one of the most prominent topics in CSR. From metrics,
integrated reports, and rankings to third party assurance it is no easy task. The guidance
given by the Global Reporting Initiative (GRI) is a helpful start, but from there
companies need to map out what makes sense for their particular interests and
stakeholders. This requires companies to assess what key stakeholders want out of a
report, how to capture that information and then communicate it through channels
stakeholders find accessible. Reporting is crucial because it captures the CSR work being
done and addresses concerns from a multitude of stakeholders. Companies need to ensure
that what is going to these reports and how they are being distributed is reflective of what
their stakeholders need from them.

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Chapter Nine: Regulations on the Horizon
One of the problematic issues in CSR can be regulation. Externalities arise when
firms create social costs that they do not have to bear, such as pollution. Thus, society
must impose taxes, regulations, and penalties so that firms “internalize” these
externalities—a belief influencing many government policy decisions (Porter & Kramer,
2011). Given the absence of formal CSR regulations today, companies voluntarily create
initiatives and increase transparency in a way that restricts them less than regulatory
practices would. Regulation describes the entirety of rules, laws and codified norms
which are part of the legal framework of business and which govern its ethical, social and
environmental responsibilities (Visser et al, 2010). One perspective is that on the surface
one could say governmental regulation and CSR have a mutually exclusive relationship:
CSR as a voluntary business activity takes place in areas where regulation either does not
exist or is insufficiently enforced. This chapter discusses the impact of regulations and
the role they play in CSR and CSR communications.
The California Transparency in Supply Chains Act (SB 657), which was enacted
this year, applies to all retail sellers and manufacturers doing business in California with
annual worldwide gross receipts over $100 million. The Act requires public disclosure of
companies’ efforts in identifying suppliers or sub-suppliers that use forced labor or
human trafficking by January 1, 2012. Some 3,200 companies are impacted (UL-STR,
2011). The law’s tagline is: “Know your supply chain, protect your brand.” This puts the
importance communication efforts right at the forefront and is important because a
company will then be held accountable for what it is communicating. The California
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Transparency in Supply Chain Act seeks to ensure that manufacturers that say they are
monitoring their supply chain in fact are doing so – if not, they cannot prominently
communicate that they are.
Some companies have already tried to incorporate requirements like California’s
Transparency in Supply Chains Act into their communication efforts. Ford, for example,
has an entire section on their website dedicated to this, and frames their message by
stating that they are already going above and beyond the information being asked of them
(Ford, 2011). The Gap also has a section on their website dedicated to explaining their
efforts in this area, as well (The Gap, 2011).
The Dodd-Frank (HR 4173) financial reform bill that passed in 2010 also includes
Section 1502, which intends to stop the trade in conflict minerals by informing
consumers if the goods they purchase include them. Dodd-Frank imposes new supply-
chain reporting requirements on U.S. companies sourcing conflict minerals (KPMG,
2011) from the Democratic Republic of Congo (DRC), where the extraction and trade of
tin, tantalum, tungsten and gold are used to finance armed conflicts that have led to
human rights violations (DRC Report, UN Human Rights Report 2010). The aim of laws
such as Dodd-Frank is to put information into consumer hands. Again, this also puts
emphasis on supply-chain issues, giving companies less wiggle room for taking
responsibility. This also means that companies must factor such requirements in their
reports, which can be time-consuming and cumbersome.
Similarly, the Carbon Disclosure Project (CDP) is an organization based in the
United Kingdom that works with shareholders and corporations to disclose the
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greenhouse gas emissions of major corporations. In 2008, it published the emissions data
for 1,550 of the world's largest corporations, which accounted for 26% of global
anthropogenic emissions (Carbon Disclosure Project, 2011). The CDP represents 551
institutional investors with a combined $71 trillion under management. Although not a
legal regulation like the previous two examples, the CDP poses a threat of the potential
regulation to come. This also reinforces those stakeholder groups who are looking to
institutionalize this type of reporting framework.
The regulatory landscape is important to discuss because as companies build out
CSR strategies and initiatives they must take into consideration the regulations that exist
or may be underway. For companies that are already reporting on the information asked
of them, they have to figure out a way to communicate this effectively to all those who
need access to the information. New or additional regulations also potentially muddle
messages that are created by communications teams, because they must be factored into
reports and into the company’s overall CSR story. This is when storytelling is important;
a company should not report information for reporting’s sake. Even if information is
mandated by regulation, there should be an accompanying narrative about how it fits into
the business and to the vision of the company’s commitment. These regulations also
allow companies to be forward thinking; it forces them to find ways to be innovative and
collaborative so as to come up with solutions that work best for both the private and
public interest.
It is important to realize that the industries, cultures and regulatory systems within
which corporations operate can shape CSR. Industries differ in terms of their impacts on
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society and structures. The extraction industry and the apparel industry, for example, face
largely different CSR issues. However, the communication challenges are similar. This
paper aims to assess is not so much what is being reported (though very important) but
how it’s reported – focusing on being effectiveness through communication efforts.

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Conclusion
The climate for promoting responsible business could not be better. The paradigm
shift in attitudes toward business, and their business’ responsibility to contribute to a
sustainable society, is unprecedented. CSR is no longer viewed just as risk mitigation or
philanthropy but as an opportunity for value creation. The push for transparency is not
just for the sake of a company’s reputation but also provides opportunities to enhance
reporting and actually create data rich reports that can map positive systemic change. The
communications practice has the opportunity to catch up and align with efforts being
done in the CSR field. With shifts in trust and transparency, reporting metrics and
communications, there is no better moment for a reevaluation of the approach to
communication strategy in CSR.
Communication and CSR managers have described an evolutionary arch over the
past 15 years of CSR, moving from corporate philanthropy to “issues management” to,
ideally, a reality where CSR becomes an expression of corporate culture and values.
Although there are several studies that point to CSR’s impact on consumers’ opinion and
perception, there is a lack of research that points to behavioral changes. This is a critical
point, because as CSR moves to demonstrate its value and ROI to a company,
communication efforts must be able to account for more than just perception – it must be
tied to behaviors.
This thesis seeks to demonstrate that communications professionals must
distinguish and understand critical moments of transition that impact the practice of CSR.
They must also be aware of the broader macroeconomic landscape that shapes and
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impacts the CSR field. The 2008 financial crisis was a pivotal moment for business – not
just for transparency and reputation. The aftermath of the financial crisis represents a
larger shift in how businesses must operate in a global economy and society, and how
CSR communication must adapt to and leverage this shift.
This new landscape of business can be illustrated through the Benefit
Corporation, which has been created by the non-profit organization B-Lab. The new
category allows corporations to officially adopt policies "that create a material positive
impact on society and the environment" as part of their legal charter. It also redefines the
fiduciary duty of executives and board members to look out for the interests of workers,
the community and the environment in addition to meeting their duty to make a profit for
shareholders (B-Corporation, 2011). The law supporting B-Corp status provides
corporations with a legal "safe haven" from shareholders who contend that company's
environmental or social policies dilute the value of their stock. The momentum for this
new corporate form is building across the country. Seven states, starting with Maryland
in April 2010, and California most recently in 2012, have passed legislation that allows
companies to incorporate as benefit corporations (Singh, 2012). This signals the evolving
relationship of business and society, by allowing CSR to become codified into actual
organizational structure; much more innovative and regulative approaches are also on the
horizon.
CSR is evolving to become more standardized and operationalized, yet
communication efforts often do not reflect that. Four different communication challenges
(motivation, definition, audience, reporting) were outlined through case studies of several
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leading companies. There is still more research that needs to be done in this field. For
example, there are a number of medium-sized companies that seem to be stalled in their
ability to take on CSR programs and implement them effectively.
Also not captured fully in this analysis is an exploration of the shifting landscape
of media and how it might impact CSR communication. An analysis on the impact of
digital and social media would be insightful for CSR managers looking to engage with
stakeholders on different platforms. Digital tools create a sense of hyper-transparency
that can provide opportunities for companies to build trusting relationships with their
stakeholders. The real challenge for companies is not just to release data about their CSR
practices, but also to present that information in a way that empowers stakeholders to
make informed decisions (Business for Social Responsibility, 2011). At present, it is not
clear how important social media will be in applying pressure on companies to change
their practices from a CSR perspective. Could social media play a role in corporate
change? While an effective crowd-engaging tool, it yet to be established what social
media’s true potential in driving corporate social responsibility will be.
The research presented here is only a brief snapshot of what the current context
holds. This field is rapidly evolving and blurring lines across academic interests and
industry. Many external factors will continue to play a role in refining and shaping CSR.
For instance, in 2012 the U.S. Supreme Court will consider a case about Royal Dutch
Shell’s activities in Nigeria, and determine whether corporations can be sued for human
rights abuses abroad (Colombant, 2012). This type of action will most certainly impact
companies’ future focus on communicating CSR activities.
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The interviews conducted for this project demonstrated some “real world” gaps in
communication: stakeholders are not being reached, mass awareness rates tend to be low,
and the message of CSR efforts is not necessarily being received. CSR reports are not a
mass communication strategy. There needs to be a better effort in packaging information.
There was also consensus that segmenting stakeholders was largely is not being done
well. Also prevalent was the notion that while reporting is a good thing, there is still a
long way to go. Reporting was considered most effective when the right things are
measured and communicated in a way that is accessible and understood by stakeholders.
Communication professionals must note that sustainability is likely not as
ingrained in the DNA of a company as it should be or believed to be. There is still a lot of
work to be done in this regard. What communication managers can do is to continue
strengthening their company’s CSR work by ensuring internal and external audiences
understand the way CSR is being undertaken by that particular company. However,
consumers need to understand that companies evaluate responsibility differently;
responsibility could mean reducing carbon emissions to one firm and stopping human
trafficking to another. This is where companies need to establish more consistent
parameters of what CSR means in the context of the company and how CSR fits into a
shared vision of its meaning with a broader audience.
A recurring theme throughout the research was the uncertainty of communication
professionals being involved in the CSR process. What this paper sought to understand is
how communications is responding and adapting to the dynamics of the CSR field. This
is critical, because public relations professionals need to understand a multitude of factors
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that will influence their success in CSR. As the CSR practice continues to evolve, so
must the communication efforts.

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Discussion
Companies chosen for the case studies in the communication challenges reflect
high-profile Fortune 500 companies across various industries. The author chose to focus
on publicly traded companies, particularly larger ones that have a large stake in
mitigating risk and managing their reputation. However, private companies like
Patagonia and The Body Shop are other key players that provide innovative insight to the
CSR field. It should be noted that the case studies presented are not meant to be
comparable amongst each other as they vary in industry and scope of CSR work. Though
emphasis varies throughout industry, effective general communication strategies are
important to establish, as they may be useful across sectors, so this research sought to
compile cross-industry strategies that could be effective for CSR communication
purposes.
The interviews conducted for this research were not all audio-recorded. This must
be noted given that it means the information gathered is subject to the author’s
interpretation. Interview questions were not standardized across all participants. Given
the very diverse backgrounds of interviewees, questions were altered to accommodate
that person’s expertise and field of work. All interviews discussed the topic of CSR
challenges in the field all from the interviewee’s specific vantage point. The author
believes this process yielded a very well rounded approach to the content produced.
69
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Abstract (if available)

Abstract This thesis seeks to examine how corporate communications has responded and adapted to changes in the corporate social responsibility (CSR) field. In order to do so, this thesis chronicles how the CSR landscape has changed in response to many internal and external pressures. The field of corporate social responsibility has evolved from its philanthropic roots to a more central and regulated practice. That means communication efforts must make a similar transformation in order to effectively communicate CSR work. Examining the evolving field of corporate social responsibility lays the groundwork for understanding how communications must adapt to new challenges. Key issues discussed in this paper include the origins of CSR, current demands in the field and communication challenges. The research demonstrates that CSR needs effective communicators who understand both how the landscape is changing and what stakeholders are looking for in order to create a more engaging, honest and effective dialogue.

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Asset Metadata

Creator Valdivia, Vanessa (author)

Core Title The CSR paradox: how communicating about good can turn out bad

School Annenberg School for Communication

Degree Master of Arts

Degree Program Strategic Public Relations

Publication Date 05/02/2012

Defense Date 05/01/2012

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag communications,corporate citizenship,corporate social responsibility,OAI-PMH Harvest,Public Relations,sustainability

Language English

Contributor Electronically uploaded by the author (provenance)

Advisor Kahn, Gabriel (committee chair), Jackson, Laura Min (committee member), Tenderich, Burghardt (committee member)

Creator Email vvaldiv@gmail.com,vvaldivi@usc.edu

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c3-21824

Unique identifier UC11290259

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Legacy Identifier etd-ValdiviaVa-713.pdf

Dmrecord 21824

Document Type Thesis

Rights Valdivia, Vanessa

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the a...

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